Below are highlights from the NDW Morning Update Video for the morning of 7/22. Access the the video on the NDW Morning Update Video page. 

• US equity futures are lower this morning. Nasdaq-100 futures are leading the market lower, down around 1%.
• Tuesday was a strong day for stocks across the board as US and international indices were higher.
• The S&P 500 was up 89 bps. Technology led the market higher as the Nasdaq-100 (NDX) gained 1.93% while the iShares Semiconductor ETF (SOXX) was up 5.45%. SOXX is still down more than 13% over the last 30 days.
• Small caps outperformed as the Russell 2000 (RUT) was up more than 1.5%.
• The iShares MSCI Emerging Markets ETF (EEM) gained more than 2.8% while the iShares MSCI EAFE ETF (EFA) gained 1.45%.
• Crude oil has continued to advance as it gained more than 2.25% yesterday and is up more than 3% pre-market, trading around $87/bbl as the market continues to digest renewed tension in the Middle East.
• Precious metals advanced on Tuesday despite rising yields as silver (SI/) gained 3.7% and gold (GC/) climbed 1.65%. Silver traded above $60 overnight which should return it to a buy signal on its default point & figure chart. Meanwhile, gold is trading above $4100, which would return it to a buy signal also. Gold has now established notable support at $3980, reversing up from that level three times since last month.
• We get the first Mag 7 earnings releases of the quarter this afternoon as Tesla (TSLA) and Alphabet (GOOGL) are set to report. Both stocks are currently acceptable 3 for 5’ers.

One of the hallmarks of NDW’s relative strength-based methodology is the ability to adapt to market changes and rotate to areas of new leadership within asset classes, sectors, subsectors, etc. One of NDW’s more popular sector rotation strategies, the First Trust Focus Five Model (FTRUST5), is among the many strategies that have been adapting to leadership trends in 2026 and experienced a trade Wednesday (7/22) morning. Before diving into the changes the model has experienced in 2026, the methodology behind the First Trust Focus Five Model is detailed below. For those already familiar with the model, feel free to skip to the section discussing the models trade history.

First Trust Focus Five Model Methodology

The Focus 5 Model is a sector rotation strategy that invests in five sector/industry ETFs based on the relative strength ranking of 21 sectors and subsectors. Since its inception in 2009, the model has looked to buy the sectors with the highest relative strength. The five positions are held as long as they sit in the top half of the model’s rankings. Positions are only sold when they fall out of the top half of the relative strength rankings.

Relative strength is just another phrase for momentum. Funds at the top of the Focus Five relative strength ranking demonstrate more momentum than the funds ranked at the bottom. Over time, relative strength (momentum) has been a robust investment factor with the potential to provide investors with excess returns. However, that does not mean a relative strength-based strategy will outperform all the time. There are two types of market environments where relative strength-based strategies tend to underperform: during changes in leadership, and periods with low dispersion of between leaders and laggards.

The first environment is straightforward.  For example, if the market is going from a growth-led market to a value-led market, it will take some time for a relative strength strategy to adjust to that new leadership. As the old leadership rotates out, by definition, it will have to endure a period of underperformance before being sold. Subsequently, for the new leadership to move into the models we need to see a period of outperformance before those new areas of strength can be added to the models. The second market environment, narrow leadership, can take on different forms. While prior years were defined by narrower leadership, 2026 has been defined more by the changing short-term trends and lack of long-term leadership. Fortunately, even with all the changes experienced within the Focus Five Model this year, the strategy has gained more than 11% on a year-to-date basis through 7/21’s close, outpacing the S&P 500 Index (SPX) by 1.5%.

Focus Five: Trading History Examination

Today marked the eighth trade of 2026 within the First Trust Focus Five Model (FTRUST5) as the First Trust Nasdaq Semiconductor ETF (FTXL) was removed from the model holdings and replaced by the First Trust Nasdaq Pharmaceuticals ETF (FTXH). Prior to the recent change, the Focus Five had shifted into exposure in biotechnology (FBT), transportation (FTXR), and broader technology by way of FXL and the Nasdaq-100 technology fund (QTEC). While the short-term pain of adapting and rotating to new leadership is uncomfortable, our research into the Focus Five Model’s trade history has shown the strategy does well in mitigating downside when seeing short-term rotation. Additionally, once the strategy is able to capture sustained long-term leadership trends it can capitalize.

Going back to the model’s inception in 2009, the tables below examine this model’s trade history. The bullet points below discuss notable highlights from the data.

• 31 of the 44 trades since the model’s inception in 2009 have resulted in a positive return, a 70% positive hit rate, with the average return of those positive trades being 66%. The overall average return for the 44 trades is 42% with the average return for a negative trade was -11%.
• The average holding period for each fund held within the model is 686 calendar days, or 1.9 years. 27 of the 44 trades have involved a fund that was held for longer than a year with the average return being 69% for those longer-term holdings. While roughly 40% of the trades have been short-term, the average return for those funds has been 2%.
• On average, holdings that have been in the model more than one year produced a positive return of roughly 89% of the time with an average gain of 79%. Of the 11% of the time long-term holdings produce negative returns the average return is -6%.
• FTXL’s 95% gain marked the best return for a fund that has been held less than one year. On average, holdings that have been in the model less than one year produced a positive return roughly 40% of the time with an average gain of 23%. Of the roughly 60% of the time short-term holdings produce negative returns the average return is -13%.
• Roughly 1 in 7 trades delivered a truly outsized, portfolio-defining gain. Five trades (12%) provided a return greater than 100%, plus two more in the 80-100% band. The top trade belongs to FDN when it was held from inception to 2021, gaining 818% during the 11-year period.
• While there have been 13 trades resulting in negative returns, the worst witnessed in the model’s history was FXN when it was held for roughly a quarter’s time and fell -26%.

As the data and bullets highlight, once the Focus Five model is able to participate in long-term trends, it is capable of producing outsized gains. Additionally, even during periods of turbulence or change, the model is able to mitigate downside by continuing to adapt to the trends prevalent within the market.

Each week the analysts at NDW review and comment on all major asset classes in the global markets. Shown below is the summary or snapshot of the primary technical indicators we follow for multiple areas. Should there be changes mid-week we will certainly bring these to your attention via the report.

Remember, these are technical comments only. Just as you must be aware of fundamental data for the stocks we recommend based on technical criteria in the report, so too must you be aware of important data regarding delivery, market moving government releases, and other factors that may influence commodity pricing. We try to limit our technical comments to the most actively traded contracts in advance of delivery, but some contracts trade actively right up to delivery while others taper off well in advance. Be sure you check your dates before trading these contracts. For questions regarding this section or additional coverage of commodities email james.west@nasdaq.com.

Data represented in the table below is through 7/21/2026:

Portfolio View - Commodity Indices

Cryptocurrency Update

Cryptocurrency Video (3:44)

The option suggestions featured here are pulled from the NDW Options Ideas tool. These are just a sample of the ideas that can be found there. The Options Idea tool contains numerous additional income and speculative plays. It also offers relative strength-based screens targeting the highest (and lowest) relative strength stocks and ETFs that have recently moved counter to their longer-term trend. To access or subscribe to the Options Ideas tool, click here.

Call

American Express Company (AXP) Oct 16 $340 Call

Put

Boston Scientific Corporation (BSX) Nov 20 $45 Put

Income (Short Put)

BlackRock, Inc. (BLK) Aug 21 $1000 Short Put